WWE® Reports 2011 Second Quarter Results

August 04, 2011 08:30 AM Eastern Daylight Time

STAMFORD, Conn.--(BUSINESS WIRE)--WWE (NYSE:WWE) today announced financial results for its second quarter
ended June 30, 2011. Revenues totaled $142.6 million as compared to
$106.8 million in the prior year quarter. Operating income was $21.0
million as compared to $10.3 million in the prior year quarter. Net
income was $14.3 million, or $0.19 per share, as compared to $6.3
million, or $0.08 per share, in the prior year quarter. There were
several items that impacted the comparability of our year-over-year
results, primarily the timing of our annual WrestleMania® event
and a $3.3 million film impairment charge in the current year quarter.
Adjusting for these items in both the current and prior year quarters
(as described below), adjusted revenues increased 5% to $142.6 million
from $135.6 million in the prior year quarter. Adjusted Operating income
declined 2% to $22.9 million from $23.4 million in the prior year
quarter. Adjusted Net income was $15.5 million, or $0.21 per share, as
compared to $15.1 million, or $0.20 per share, in the prior year quarter.

“Through the second quarter, WWE has generated top-line growth across
our four business segments led by the strength of WrestleMania. WrestleMania
XXVII achieved more than 1 million pay-per-view buys worldwide and
reached record levels of both revenue and profit,” stated Vince McMahon,
Chairman and Chief Executive Officer. “Our earnings, however, were
constrained by the performance of our movie business, adverse home video
sales trends, and the status of our talent development. Key operating
metrics, such as average live event attendance and pay-per-view buys
showed declines in the second quarter when evaluated on a comparable
basis to last year (excluding WrestleMania). But, while our key
metrics were down, the gap to our prior year performance continued to
diminish. We believe this trend demonstrates that we are making
important progress on our talent development and creative initiatives.
As we continue to evaluate the potential of different forms of
distribution, such as a WWE Network, we are more confident than ever
that we can create and monetize content in a variety of existing and new
media, and thereby create meaningful incremental value for our
shareholders.”

Comparability of Results

WrestleManiaXXVII occurred on April 3, 2011 and
contributed $35.9 million of revenues, $16.7 million of profit
contribution ($11.4 million, net of tax) and $0.15 of EPS from across
various business lines to our current year second quarter results. In
conjunction with the promotion of this event, $1.4 million in marketing
expenses were recognized in the first quarter of 2011. WrestleMania
XXVI occurred on March 28, 2010, and contributed $28.8 million of
revenues, $13.1 million of profit contribution ($8.8 million, net of
tax) and $0.12 of EPS to our first quarter of 2010 results. In order to
facilitate an analysis of our financial results on a more comparable
basis, where noted, we have adjusted our results to include the
promotional costs (discussed above) in our second quarter of 2011
results and added the impact of WrestleManiaXXVI to the
second quarter of 2010 results. In addition, the current year quarter
included a $3.3 million impairment charge related to our film, That’s
What I Am. We have also adjusted our second quarter of 2011 results
to exclude the impact of this charge. (See Schedules of Adjustments in
Supplemental Information). Please note that our revised film strategy
utilizing a self-distribution model may also impact the comparability of
results but is not adjusted in the aforementioned schedules.

Three Months Ended June 30, 2011 – Results by
Business Segment

Revenues from North America and outside North America increased 46% and
9%, respectively, led by increases in our Live and Televised
Entertainment segment. Adjusted revenues rose 7% in North America,
driven by $7.0 million in increased revenue from WrestleMania,
and were essentially flat outside North America. Revenue in the current
year quarter included an approximate $1.9 million favorable impact from
foreign exchange rates.

The following tables reflect net revenues by segment and by region for
the three months ended June 30, 2011 and June 30, 2010. (in millions)

Three Months Ended

June 30,

June 30,

Net Revenues by Segment

2011

2010

Live and Televised Entertainment

$

110.5

$

77.4

Consumer Products

21.6

23.3

Digital Media

6.2

5.4

WWE Studios

4.3

0.7

Total

$

142.6

$

106.8

Three Months Ended

June 30,

June 30,

Net Revenues by Region

2011

2010

North America

$

103.0

$

70.5

Europe, Middle East & Africa (EMEA)

26.0

21.6

Asia Pacific (APAC)

8.3

8.1

Latin America

5.3

6.6

Total

$

142.6

$

106.8

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were
$110.5 million for the current year quarter as compared to $77.4 million
in the prior year quarter primarily reflecting the timing of WrestleMania.
Adjusted segment revenues (including the impact of WrestleMania XXVI
in the prior year quarter) increased approximately 4% from $105.9
million, driven by $6.4 million in incremental live event and
pay-per-view revenue from WrestleMania.

Live Event revenues were $35.2 million as compared to $29.2
million in the prior year quarter, primarily due to the timing of WrestleMania
XXVII. Adjusted revenues decreased 2% from $35.9 million
reflecting a $1.9 million decline in live event revenue from non-WrestleMania
events, partially offset by increased ticket revenue from WrestleMania.

There were 87 total events, including 30 international events,
during the current year quarter as compared to 90 events,
including 28 international events, in the prior year quarter
primarily due to the timing and logistics of our event touring
schedule.

North American events generated revenues of $20.6 million from 57
events as compared to $14.3 million from 62 events in the prior
year quarter. North American average attendance increased 14% to
approximately 6,600 from 5,800 in the prior year quarter. The
average ticket price for North American events was $49.26 in the
current year quarter as compared to $39.50 in the prior year
quarter. On an adjusted basis, revenues decreased 2% from $21.0
million as increased revenues from WrestleMania were more
than offset by a decline in revenues from non-WrestleMania
events. The decline in revenue for these events was primarily due
to a 10% reduction in the number of events in the current year
quarter (56 events in the current year quarter as compared to 62
in the prior year quarter). For these events, average attendance
declined 3% to 5,600.

International events generated approximately $14.6 million of
revenues from 30 events as compared to $14.9 million from 28
events in the prior year quarter. International average attendance
decreased 20% to 6,600 from 8,200 in the prior year quarter due in
part to changes in territory mix. The decline in attendance was
partially offset by minimum revenue guarantees that protect our
interests when traveling to territories with higher economic
risks. In addition, average ticket prices increased 11% to $68.31
in the current year quarter, due in part to favorable changes in
foreign exchange rates.

Pay-Per-View revenues were $34.4 million as compared to $10.4
million in the prior year quarter. There were four pay-per-view events
produced in the current year quarter as compared to three events in
the prior year quarter. Adjusted revenues (including the impact of WrestleMania
XXVI in the prior year quarter) increased approximately 17%, or
$5.0 million, driven by $5.2 million in incremental revenue from WrestleMania.
For our non-WrestleMania events, revenues were essentially flat
to the prior year quarter. Overall, current period buys for these
events were essentially flat to the prior year quarter as a domestic
decline of 9% was offset by increased buys from outside North America.
Current period international buys for these events were impacted by
the timing of our pay-per-view distribution in the U.K. Our television
partner in the U.K. selected two events, Extreme Rules™ and WWE
Capitol Punishment™, in the current year quarter for distribution
via pay-per-view, as compared to one event, Over The Limit™, in
the prior year quarter.

The details for the number of buys (in 000s) are as follows:

Broadcast Month

Events (in chronological order)

Three Months Ended June 30,

2011

2010

April

WrestleManiaXXVII

1,059

-*

May

Extreme Rules™

209

182

May

Over The Limit™

140

197

June

WWE Capitol Punishment/ Fatal 4 Way™

170

143

Prior events

20

10

Total

1,598

532

*WrestleMania XXVI contributed approximately 885,000 buys to the
first quarter of 2010.

Television Rights Fees revenues were $32.0 million as compared
to $30.8 million in the prior year quarter. This increase was
primarily due to improved terms and contractual increases from our
existing programs, partially offset by the absence of rights fee for
our NXT™ and WWE Superstars programs.

Venue Merchandiserevenues were $6.3 million as compared
to $4.3 million in the prior year quarter, primarily due to the timing
of WrestleMania. Adjusted revenues (including the impact of WrestleMania
XXVI in the prior year quarter) increased approximately $0.4
million from $5.9 million, driven by incremental revenue from WrestleMania.

Consumer Products

Revenues from our Consumer Products businesses decreased 7% to $21.6
million from $23.3 million in the prior year quarter, primarily due to a
decline in home video sales, partially offset by growth in our Licensing
business.

Home Video net revenues were $7.5 million as compared to $11.5
million in the prior year quarter, primarily reflecting an 11%
decrease in shipments to 917,000 units including the impact of one
fewer release in the current year quarter, and lower sell-through
rates. In addition, average effective unit prices fell 6% to
approximately $12.50, reflecting the impact of ongoing discounts and
promotional activity.

Licensing revenues were $12.0 million as compared to $8.7
million in the prior year quarter, primarily due to our video game
products. Revenues from this product category increased by
approximately $4.2 million, led by the launch of our new video game, WWE
All Stars. Unit shipments of our SmackDown vs. Raw video
game decreased 47% to 196,000 units as compared to the prior year
quarter. Revenues related to toys were essentially flat to the prior
year quarter.

Magazine publishing net revenues were $1.6 million as compared
to $2.5 million in the prior year quarter, reflecting lower newsstand
sales in the current year quarter.

Digital Media

Revenues from our Digital Media related businesses were $6.2 million as
compared to $5.4 million in the prior year quarter, representing a 15%
increase. Adjusted revenues (including the impact of WrestleMania XXVI
in the prior year quarter) increased approximately 9% from $5.7 million
driven by increased sales of merchandise on our e-commerce website,
WWEShop.

WWE.com revenues were $3.4 million as compared to $3.0 million
in the prior year quarter, primarily reflecting increases in
pay-per-view webcast and advertising revenues. Adjusted revenues
(including the impact of WrestleMania XXVI in the prior year
quarter) remained essentially flat to prior year quarter.

WWEShop revenues were $2.8 million as compared to $2.4 million
in the prior year quarter. The number of orders increased by 26% to
approximately 59,000, partially offset by an 8% decline in the average
revenue per order to $46.71.

WWE Studios

During the quarter, WWE Studios recognized revenue of $4.3 million as
compared to $0.7 million in the prior year quarter, with the growth in
revenue driven by the release of our latest film, That’s What I Am.
Revised ultimate projections for this film, which reflect lower actual
home video sales than anticipated, resulted in a $3.3 million impairment
charge. The growth in revenue also reflected receipts from our film 12
Rounds. Film profits declined $3.7 million from the prior year
quarter driven by the aforementioned impairment charge and the
previously disclosed change in our distribution model for films. Under
our self distribution model, we record a film’s advertising costs and
distribution expenses in our results as incurred.

Profit Contribution (Net revenues less cost of
revenues)

Profit contribution increased to $53.7 million in the current year
quarter as compared to $43.8 million in the prior year quarter,
reflecting approximately $16.7 million in WrestleManiaXXVII
related profit in the current year quarter. Adjusted profit contribution
(excluding the film impairment charge in the current year quarter and
including the impact of WrestleMania in both the current and
prior year quarters) declined 2% to $55.6 million. Increased profits
from the launch of our new video game, WWE All Stars, and
incremental profits from WrestleMania were more than offset by
the impact of lower home video sales and the absence of rights fees for
our NXT and Superstars programs. Adjusted profit
contribution margin decreased to 39% from 42% reflecting, in part,
increased investment in our WrestleMania pay-per-view and the mix
of revenue from our business segments.

Selling, general and administrative expenses

SG&A expenses were $29.0 million for the current year quarter as
compared to $30.1 million in the prior year quarter. These results
reflected increased marketing and salary expenses that were more than
offset by reductions in accrued management incentive compensation and in
accrued reserves for bad debt.

Depreciation and amortization

Depreciation and amortization expense was $3.7 million for the current
year quarter as compared to $3.4 million in the prior year quarter.

EBITDA

EBITDA was $24.7 million in the current year quarter as compared to
$13.7 million in the prior year quarter. The increase was primarily
driven by the timing of WrestleMania XXVII, partially offset by
reduced profits from our film projects. Adjusted EBITDA (excluding the
film impairment charge in the current year quarter and including the
impact of WrestleMania in both the current and prior year
quarters) was $26.6 million in the current year quarter as compared to
$26.8 million in the prior year quarter.

Investment and Other (Expense) Income

Investment income was $0.5 million in both the current year quarter and
prior year quarters. Other expense of $0.5 million, as compared to other
expense of $1.0 million in the prior year quarter, reflecting foreign
exchange losses in both quarters.

Effective tax rate

In the current year quarter, the effective tax rate was 32% as compared
to 35% in the prior year quarter. The decrease in tax rate was primarily
due to a $0.6 million benefit relating to the shutdown of a Canadian
subsidiary.

Summary Results for the Six Months Ended June
30, 2011

Total revenues through the six months ended June 30, 2011 were $262.5
million as compared to $245.6 million in the prior year period.
Operating income for the current year was $34.2 million versus $47.6
million in the prior year period. Net income was $22.9 million, or $0.31
per share, as compared to $31.0 million, or $0.41 per share, in the
prior year period. EBITDA was $41.5 million for the current six month
period as compared to $52.8 million in the prior year period. The
current year period was impacted by a combined $6.1 million film
impairment charge for 12 Rounds and That’s What I Am,while
the prior year period reflected an infrastructure tax incentive which
reduced depreciation and amortization expense by $1.6 million. Adjusting
for these items, Adjusted Operating income for the current year was
$40.3 million versus $46.0 million in the prior year period. Adjusted
Net Income was $26.9 million, or $0.36 per share, as compared to $29.9
million, or $0.40 per share.

Six Months Ended June 30, 2011 – Results by
Business Segment

Revenues from North America and outside North America increased 9% and
2%, respectively, led by increases in our WWE Studios and Live and
Televised Entertainment segments, where the latter reflected the
incremental performance of WrestleMania. There was an approximate
$1.9 million favorable impact from foreign exchange rates in the current
year period.

The following tables reflect net revenues by segment and by region for
the six months ended June 30, 2011 and June 30, 2010. (Dollars in
millions)

Net Revenues by Segment

Six Months Ended

June 30,

June 30,

2011

2010

Live and Televised Entertainment

$

180.9

$

175.7

Consumer Products

56.4

54.0

Digital Media

12.3

11.8

WWE Studios

12.9

4.1

Total

$

262.5

$

245.6

Net Revenues by Region

Six Months Ended

June 30,

June 30,

2011

2010

North America

$

192.7

$

177.5

Europe, Middle East & Africa (EMEA)

42.9

40.6

Asia Pacific (APAC)

16.7

15.9

Latin America

10.2

11.6

Total

$

262.5

$

245.6

Live and Televised Entertainment

Revenues from our Live and Televised Entertainment businesses were
$180.9 million for the current year period as compared to $175.7 million
in the prior year period, an increase of 3%.

June 30,

June 30,

2011

2010

Live Events

$54.8

$55.2

Pay-Per-View

$47.9

$42.8

Venue Merchandise

$10.8

$10.8

Television Rights Fees

$63.6

$60.2

Television Advertising

$0.3

$2.9

WWE Classics On Demand

$2.3

$2.5

Consumer Products

Revenues from our Consumer Products businesses were $56.4 million for
the current year period as compared to $54.0 million in the prior year
period, an increase of 4%.

June 30,

June 30,

2011

2010

Home Video

$

15.6

$

19.1

Licensing

$

35.9

$

28.6

Magazine Publishing

$

3.8

$

5.3

Digital Media

Revenues from our Digital Media related businesses were $12.3 million as
compared to $11.8 million in the prior year period, an increase of 4%.

June 30,

June 30,

2011

2010

WWE.com

$

6.1

$

6.4

WWEShop

$

6.2

$

5.4

WWE Studios

During the current year period, WWE Studios recognized revenue of $12.9
million as compared to $4.1 million in the prior year period, with the
growth in revenue driven by the performance of our film 12 Rounds
and the release of our latest films, The Chaperone and That’s
What I Am. Lower than anticipated performance for 12 Rounds
and That’s What I Am resulted in $6.1 million of impairment
charges related to these films. Film profits declined $9.3 million from
the prior year period driven by the aforementioned impairment charges,
lower receipts from our other licensed films and the previously
disclosed change in our distribution model for films. Under our self
distribution model, we record a film’s advertising costs and
distribution expenses in our results as incurred.

Profit Contribution (Net revenues less cost of
revenues)

Profit contribution decreased to $100.4 million in the current year
period as compared to $108.8 million in the prior year period, primarily
driven by lower results of our WWE Studios segment. Adjusted profit
contribution (excluding the film impairment charges in the current year
period) declined 2% to $106.5 million primarily due to the performance
of our home video operations and lower results from our film projects.
Adjusted profit contribution margin declined to 41% from 44% primarily
reflecting the change in our distribution model for films and to a
lesser extent, lower home video sell through rates and increased
investment in our WrestleMania pay-per-view.

Selling, general and administrative expenses

SG&A expenses were $58.9 million for the current year period as compared
to $56.0 million in the prior year period, primarily reflecting
increases in legal fees and marketing expense. Increases in salary and
benefit expenses were offset by a reduction in accrued management
incentive compensation.

EBITDA

EBITDA for the current year period was approximately $41.5 million as
compared to $52.8 million in the prior year period. Adjusted EBITDA
(excluding the film impairment charge in the current period) declined to
$47.6 million from the prior year period primarily due to a 5% increase
in SG&A expenses and the lower results from our home video and film
operations.

Investment and Other Income (Expense)

Investment income was $1.0 million in both the current and prior year
periods. Other expense of $0.4 million, as compared to $2.1 million in
the prior year period, reflecting realized foreign exchange losses in
both periods.

Effective tax rate

The effective tax rate was 34% in the current year period as compared to
33% in the prior year period. The decrease in tax rate over our
anticipated rate of 35% was primarily due to a $0.6 million benefit
relating to the shutdown of a Canadian subsidiary. The prior year period
rate was positively impacted by the recognition of a benefit of $0.8
million relating to previously unrecognized tax benefits, primarily as a
result of the statute of limitations expiring in jurisdictions where the
Company had taken uncertain tax positions.

Cash Flows

Net cash provided by operating activities was $39.3 million for the six
months ended June 30, 2011 as compared to $24.9 million in the prior
year period. This $14.4 million increase was primarily driven by the
timing of feature film production activities and tax payments.

In the current year period, we spent $18.3 million less on feature film
production, including the impact of film production tax incentives, and
received a $9.0 million federal tax refund. However, these items were
partially offset by lower operating results and the timing of a $7.5
million advance from a licensee.

Additional Information

Additional business metrics are made available to investors on a monthly
basis on our corporate website – corporate.wwe.com.

Note: WWE will host a conference call on
August 4, 2011 at 11:00 a.m. ET to discuss the Company’s earnings
results for the second quarter of 2011. All interested parties can
access the conference call by dialing 855-993-1400 (conference ID: WWE).
Please reserve a line 15 minutes prior to the start time of the
conference call. A presentation that will be referenced during the call
can be found at the Company web site at corporate.wwe.com.
A replay of the call will be available approximately three hours after
the conference call concludes, and can be accessed at corporate.wwe.com.

WWE, a publicly traded company (NYSE: WWE), is an integrated media
organization and recognized leader in global entertainment. The company
consists of a portfolio of businesses that create and deliver original
content 52 weeks a year to a global audience. WWE is committed to family
friendly entertainment on its television programming, pay-per-view,
digital media and publishing platforms. WWE programming is broadcast in
more than 145 countries and 30 languages and reaches more than 500
million homes worldwide. The company is headquartered in Stamford,
Conn., with offices in New York, Los Angeles, London, Shanghai,
Singapore and Tokyo. Additional information on WWE (NYSE: WWE) can be
found at wwe.com and corporate.wwe.com. For information on our global
activities, go to http://www.wwe.com/worldwide/.

Trademarks: All WWE programming, talent
names, images, likenesses, slogans, wrestling moves, trademarks, logos
and copyrights are the exclusive property of WWE and its subsidiaries.
All other trademarks, logos and copyrights are the property of their
respective owners.

Forward-Looking Statements: This news
release contains forward-looking statements pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995, which are
subject to various risks and uncertainties. These risks and
uncertainties include, without limitation, risks relating to maintaining
and renewing key agreements, including television distribution
agreements; the need for continually developing creative and
entertaining programming; the continued importance of key performers and
the services of Vincent McMahon; the conditions of the markets in which
we compete and acceptance of the Company's brands, media and merchandise
within those markets; our exposure to bad debt risk; uncertainties
relating to regulatory and litigation matters; risks resulting from the
highly competitive nature of our markets; uncertainties associated with
international markets; the importance of protecting our intellectual
property and complying with the intellectual property rights of others;
risks associated with producing and travelling to and from our large
live events, both domestically and internationally; the risk of
accidents or injuries during our physically demanding events; risks
relating to our film business and any new business initiative which we
may undertake; risks relating to the large number of shares of common
stock controlled by members of the McMahon family and the possibility of
the sale of their stock by the McMahons or the perception of the
possibility of such sales; the relatively small public float of our
stock; and other risks and factors set forth from time to time in
Company filings with the Securities and Exchange Commission. Actual
results could differ materially from those currently expected or
anticipated. In addition, our dividend is dependent on a number of
factors, including, among other things, our liquidity and historical and
projected cash flow, strategic plan (including alternative uses of
capital), our financial results and condition, contractual and legal
restrictions on the payment of dividends, general economic and
competitive conditions and such other factors as our Board of Directors
may consider relevant.

WWE

Consolidated Income Statements

(in thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2011

2010

2011

2010

Net revenues

$ 142,554

$ 106,842

$ 262,461

$ 245,567

Cost of revenues

88,829

63,094

162,076

136,779

Selling, general and administrative expenses

29,059

30,083

58,918

55,962

Depreciation and amortization

3,644

3,411

7,279

5,250

Operating income

21,022

10,254

34,188

47,576

Investment income, net

517

497

974

980

Interest (expense)

(45)

(67)

(95)

(138)

Other (expense), net

(481)

(1,030)

(421)

(2,072)

Income before income taxes

21,013

9,654

34,646

46,346

Provision for income taxes

6,746

3,403

11,776

15,358

Net income

$ 14,267

$ 6,251

$ 22,870

$ 30,988

Earnings per share:

Basic

$ 0.19

$ 0.08

$ 0.31

$ 0.42

Diluted

$ 0.19

$ 0.08

$ 0.31

$ 0.41

Shares used in per share calculations:

Basic

74,058

74,303

74,047

74,267

Diluted

74,775

75,230

74,744

75,228

WWE

Consolidated Balance Sheets

(in thousands)

(Unaudited)

As of

As of

June 30,

December 31,

2011

2010

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

64,697

$

69,823

Short-term investments

104,527

97,124

Accounts receivable, net

48,530

52,051

Inventory

1,856

2,087

Deferred income tax assets

16,816

17,128

Prepaid expenses and other current assets

13,468

20,856

Total current assets

249,894

259,069

PROPERTY AND EQUIPMENT, NET

79,046

80,995

FEATURE FILM PRODUCTION ASSETS, NET

47,119

56,253

INVESTMENT SECURITIES

15,042

15,037

OTHER ASSETS

4,714

4,375

TOTAL ASSETS

$

395,815

$

415,729

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Current portion of long-term debt

$

1,214

$

1,169

Accounts payable

16,286

18,441

Accrued expenses and other liabilities

28,568

24,478

Deferred income

17,008

28,323

Total current liabilities

63,076

72,411

LONG-TERM DEBT

1,002

1,621

NON-CURRENT TAX LIABILITIES

9,683

15,068

NON-CURRENT DEFERRED INCOME

9,058

9,881

STOCKHOLDERS' EQUITY:

Class A common stock

276

275

Class B common stock

465

465

Additional paid-in capital

339,996

336,592

Accumulated other comprehensive income

3,531

3,144

Accumulated deficit

(31,272)

(23,728)

Total stockholders' equity

312,996

316,748

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

395,815

$

415,729

WWE

Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Six Months Ended

June 30,

June 30,

2011

2010

OPERATING ACTIVITIES:

Net income

$

22,870

$

30,988

Adjustments to reconcile net income to net cash provided by

operating activities:

Amortization of feature film production assets

15,681

2,507

Revaluation of warrants

-

(226)

Depreciation and amortization

7,279

5,250

Realized gains on sale of investments

(32)

(52)

Amortization of investment income

1,292

776

Stock compensation costs

2,552

4,957

Recovery from doubtful accounts

(508)

(606)

Provision for inventory obsolescence

977

961

Benefit from deferred income taxes

(5,507)

(5,484)

Excess tax benefit from stock-based payment arrangements

(20)

(193)

Changes in assets and liabilities:

Accounts receivable

4,029

15,215

Inventory

(746)

(407)

Prepaid expenses and other assets

4,301

(6,015)

Feature film production assets

(6,556)

(15,610)

Accounts payable

(2,155)

(328)

Accrued expenses and other liabilities

8,000

(11,766)

Deferred income

(12,139)

4,982

Net cash provided by operating activities

$

39,318

$

24,949

INVESTING ACTIVITIES:

Purchases of property and equipment and other assets

(6,780)

(6,686)

Proceeds from infrastructure incentives

-

4,130

Purchases of short-term investments

(29,823)

(63,003)

Proceeds from sales or maturities of investments

22,159

29,414

Net cash used by investing activities

$

(14,444)

$

(36,145)

FINANCING ACTIVITIES:

Repayments of long-term debt

(573)

(532)

Dividends paid

(29,951)

(41,579)

Issuance of stock, net

504

508

Proceeds from exercise of stock options

-

598

Excess tax benefit from stock-based payment arrangements

20

193

Net cash used by financing activities

$

(30,000)

$

(40,812)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(5,126)

(52,008)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

69,823

149,784

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

64,697

$

97,776

WWE

Supplemental Information – EBITDA

(in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2011

2010

2011

2010

Net income reported on U.S. GAAP basis

$

14,267

$

6,251

$

22,870

$

30,988

Provision for income taxes

6,746

3,403

11,776

15,358

Investment, interest and other expense (income), net

9

600

(458)

1,230

Depreciation and amortization

3,644

3,411

7,279

5,250

EBITDA

$

24,666

$

13,665

$

41,467

$

52,826

Non-GAAP Measure:

EBITDA is defined as net income before investment, interest and other
expense/income, income taxes, depreciation and amortization. The
Company’s definition of EBITDA does not adjust its U.S. GAAP basis
earnings for the amortization of Feature Film production assets.
Although it is not a recognized measure of performance under U.S. GAAP,
EBITDA is presented because it is a widely accepted financial indicator
of a company’s performance. The Company uses EBITDA to measure its own
performance and to set goals for operating managers. EBITDA should not
be considered as an alternative to net income, cash flows from
operations or any other indicator of WWE’s performance or liquidity,
determined in accordance with U.S. GAAP.

WWE

Supplemental Information – Schedule of Adjustments

(in millions)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2011

2010

2011

2010

Profit contribution

$

53.7

$

43.8

$

100.4

$

108.8

Adjustments (Added back):

WrestleMania XXVI

-

13.1

-

-

Film impairment charge

3.3

-

6.1

-

WrestleMania XXVII marketing and promotion

(1.4)

-

-

-

Adjusted Profit contribution

$

55.6

$

56.9

$

106.5

$

108.8

Selling, general and administrative expenses

29.0

30.1

58.9

56.0

Adjusted Selling, general and administrative expenses

$

29.0

$

30.1

$

58.9

$

56.0

Depreciation and amortization

3.7

3.4

7.3

5.2

Adjustments (Added back):

Infrastructure tax incentive

-

-

-

1.6

Adjusted Depreciation and amortization

3.7

3.4

7.3

6.8

Operating income

$

21.0

$

10.3

$

34.2

$

47.6

Adjusted Operating income

$

22.9

$

23.4

$

40.3

$

46.0

EBITDA

$

24.7

$

13.7

$

41.5

$

52.8

Adjusted EBITDA

$

26.6

$

26.8

$

47.6

$

52.8

Non-GAAP Measure:

Adjusted Profit contribution, Adjusted Selling, general and
administrative expenses, Adjusted Operating income and Adjusted EBITDA
exclude certain material items, which otherwise would impact the
comparability of results between periods. These should not be considered
as an alternative to net income, cash flows from operations or any other
indicator of WWE’s performance or liquidity, determined in accordance
with U.S. GAAP.

WWE

Supplemental Information – Schedule of Adjustments

(in millions, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2011

2010

2011

2010

Operating income

$

21.0

$

10.3

$

34.2

$

47.6

Adjustments (Added back):

WrestleMania XXVII

(1.4)

-

-

-

WrestleMania XXVI

-

13.1

-

-

Film impairment charge

3.3

-

6.1

-

Infrastructure tax incentive

-

-

-

(1.6)

Adjusted Operating income

$

22.9

$

23.4

$

40.3

$

46.0

Investment, interest and other (expense) income, net

0.0

(0.7)

0.4

(1.3)

Adjusted Income before taxes

$

22.9

$

22.7

$

40.7

$

44.7

Adjusted Provision for taxes

(7.4)

(7.6)

(13.8)

(14.8)

Adjusted Net income

$

15.5

$

15.1

$

26.9

$

29.9

Adjusted Earnings per share:

Basic

$

0.21

$

0.20

$

0.36

$

0.40

Diluted

$

0.21

$

0.20

$

0.36

$

0.40

Weighted average common shares outstanding:

Basic

74,058

74,303

74,047

74,267

Diluted

74,775

75,230

74,744

75,228

Non-GAAP Measure:

Adjusted Operating income, Adjusted Net income and Adjusted Earnings
per share exclude certain material items, which otherwise would
impact the comparability of results between periods. These should not be
considered as an alternative to net income, cash flows from operations
or any other indicator of WWE’s performance or liquidity, determined in
accordance with U.S. GAAP.

WWE

Supplemental Information - Adjusted Income Statement

Impact of WrestleMania XXVII and XXVI

(in millions)

(Unaudited)

Q1 2011

Q2 2011

Q2 2010

Q1 2010

Q2 2010

Q2 2011

Reported

WM XXVII

Adjusted

Reported

WM XXVI

Adjusted

Revenues:

Live & Televised Entertainment

Live Events

$

35.2

$

-

$

35.2

$

29.2

$

6.7

$

35.9

Venue Merchandise

6.3

-

6.3

4.3

1.6

5.9

Pay-Per-View

34.4

-

34.4

10.4

19.0

29.4

Television Rights Fees

32.0

-

32.0

30.8

-

30.8

Television Advertising

0.3

-

0.3

1.5

-

1.5

Other

2.3

-

2.3

1.2

1.2

2.4

Total Live & Televised Entertainment

110.5

-

110.5

77.4

28.5

105.9

Consumer Products

21.6

-

21.6

23.3

-

23.3

Digital Media

6.2

-

6.2

5.4

0.3

5.7

WWE Studios

4.3

-

4.3

0.7

-

0.7

Total Revenues

$

142.6

$

-

$

142.6

$

106.8

$

28.8

$

135.6

Profit Contribution

Live & Televised Entertainment

$

44.0

$

(1.4)

$

42.6

$

29.3

$

12.8

$

42.1

Consumer Products

12.0

-

12.0

12.9

-

12.9

Digital Media

1.8

-

1.8

2.0

0.3

2.3

WWE Studios

(4.1)

-

(4.1)

(0.4)

-

(0.4)

PROFIT CONTRIBUTION

$

53.7

$

(1.4)

$

52.3

$

43.8

$

13.1

$

56.9

Selling, General & Administrative

29.0

-

29.0

30.1

-

30.1

Depreciation & Amortization

3.7

-

3.7

3.4

-

3.4

Operating Income

$

21.0

$

(1.4)

$

19.6

$

10.3

$

13.1

$

23.4

Investment, interest and other income (expense), net

0.0

-

0.0

(0.7)

-

(0.7)

Income before taxes

$

21.0

$

(1.4)

$

19.6

$

9.6

$

13.1

$

22.7

Provision for income taxes

6.7

(0.4)

6.3

3.3

4.3

7.6

Net Income

$

14.3

$

(1.0)

$

13.3

$

6.3

$

8.8

$

15.1

EPS basic

$

0.19

$

(0.01)

$

0.18

$

0.08

$

0.12

$

0.20

EPS diluted

$

0.19

$

(0.01)

$

0.18

$

0.08

$

0.12

$

0.20

Non-GAAP Measure:

Adjusted Operating income, Adjusted Net income and Adjusted Earnings
per share exclude certain material items, which otherwise would
impact the comparability of results between periods. These should not be
considered as an alternative to net income, cash flows from operations
or any other indicator of WWE’s performance or liquidity, determined in
accordance with U.S. GAAP.

WWE

Supplemental Information- Free Cash Flow

(in thousands)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2011

2010

2011

2010

Net cash provided by (used in) operating activities

$

10,451

$

(13,094)

$

39,318

$

24,949

Less cash used in capital expenditures:

Purchases of property and equipment

(2,664)

(3,879)

(5,096)

(6,626)

Proceeds from infrastructure incentives

-

890

-

4,130

Purchases of other assets

-

-

(1,684)

(60)

Free Cash Flow

$

7,787

$

(16,083)

$

32,538

$

22,393

Non-GAAP Measure:

We define Free Cash Flow as net cash provided by operating activities
less cash used for capital expenditures. Although it is not a recognized
measure of liquidity under U.S. GAAP, Free Cash Flow provides useful
information regarding the amount of cash our continuing business is
generating after capital expenditures, available for reinvesting in the
business and for payment of dividends.